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| IVAC > SEC Filings for IVAC > Form 8-K on 21-Dec-2012 | All Recent SEC Filings |
21-Dec-2012
Material Impairments
On December 19, 2012, Intevac's management concluded that we expect to record in the fourth quarter of fiscal 2012 a non-cash charge of approximately $24.0 million related to a valuation allowance on certain federal deferred tax assets.
Realization of deferred tax assets depends on achieving a certain level of future taxable income. Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the deferred tax assets. Based on current and expected conditions in our served markets, management has determined that the Company can no longer assume future US based income sufficient to allow it to report the full value of its deferred tax assets under current accounting rules (ASC 740). In accordance with these accounting rules, the Company will establish a valuation allowance against our deferred tax assets relating to our U.S. current operating loss, tax credits and deductible items, as, based upon our current projections for the full 2012 fiscal year, we believe we will report a three-year cumulative loss (2010, 2011 and 2012 fiscal years) and thus the assumption of future realization can no longer be made.
In addition, the Company believes that it may recognize in the fourth quarter of fiscal 2012 a non-cash charge for impairment on a portion of our goodwill and intangible asset balances. Management is in the process of completing the annual impairment test and expects to conclude it in early January 2013. At September 29, 2012, the Company had $18.4 million and $6.0 million of goodwill and other intangibles, respectively, recorded on its Balance Sheet.
These management decisions were reported to the Board of Directors in a meeting on December 19, 2012.
Neither the establishment of the valuation allowance for certain federal deferred tax assets nor any potential charge for impairment of goodwill or intangible assets will result in future cash expenditures. They do, however, have a direct negative impact on the Company's net income and stockholders' equity for the periods in which they are recorded. In addition, the valuation allowance will result in the Company's inability to record tax benefits on future US losses until we generate sufficient future taxable income to support the elimination of the valuation allowance. The valuation allowance and impairment charges will not, however, impact Intevac's cash flow.
The impact of these charges was not included in the financial guidance provided on the Company's October 31st, 2012 earnings conference call.
Date: December 21, 2012 By: /S/ JEFFREY ANDRESON Jeffrey Andreson Vice President, Finance and Administration, Chief Financial Officer, Treasurer and Secretary
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